Finance Minister Shaukat Aziz presented on Monday a modest
budget of Rs751.7 billion, showing a gap of nearly Rs187 billion to be filled by
borrowing while allocating over 40 per cent of the outlay for debt-servicing and
capping the defence budget at the current year's level of Rs131 billion.

The budget, which carries a number of tax reliefs and reform
measures, has also adopted the self-assessment scheme as a primary mode of
assessment. Income tax has been made the tax of future with a view to promoting
a uniform application of income tax rates, eliminating exemptions, concessions
and immunities from assessment. The tax liability will be assessment-based and
use of presumptive taxes will be minimized, the finance minister said.

A comprehensive scheme of general sales tax has also been
adopted in the new budget, making the GST all pervasive. Total tax revenue
receipts of Rs457.7 billion have been envisaged in the new budget against the
revised revenue receipts of Rs400 billion in the current financial year. In view
of the number of tax reliefs offered, which would certainly reduce the revenue
collection, it is not clear how the budget proposes to raise the additional
income of Rs57.7 billion.

Provinces will get Rs190.0 billion during 2001-2002.
Subsidies worth Rs20.7 billion have also been allocated in the new budget. The
government is expecting to obtain Rs261.1 billion external resources to fund the
new budget which include Rs48.7 billion project aid, Rs190.6 billion non-project
aid and Rs21.8 billion debt rescheduling. The amount of Rs10.5 billion has been
earmarked for bank borrowing in the revenue receipts.

The major chunk of the resources amounting to Rs329.2 billion
has once again been appropriated by debt-servicing against an allocation of
Rs305 billion under this head in the current financial year. An allocation of
Rs80.6 billion has been made for running of civil expenditure. Similarly,
provision for Rs49.3 billion has been kept for grants.

Lowest GDP growth in 20 years

The year 2000-01 registered a lowest ever GDP growth rate of
2.6 per cent since '80s coupled with reduction in foreign investment and
national savings, thus making the job of the planners difficult to achieve an
overall economic recovery during the next fiscal year.

The Economic Survey 2000-01 released on Saturday at a news
conference by Finance Minister Shaukat Aziz showed mixed trends in the economy
conceding 2.6pc Gross Domestic Product growth and registering 6.8pc growth in
the manufacturing in the first nine months of the current financial year. Till
very recently, officials had been projecting a 3pc GDP growth which was
eventually placed at 2.6pc due to what the finance minister said a continuing
drought and water shortage.

The real GDP grew by 2.6pc as against 3.9pc in the last year.
However, non-agriculture GDP grew by 4.3pc this year as against 3.1pc in
1999-2000. Besides agriculture, the value addition in electricity and gas
distribution has been adversely affected by the drought.

Sugar output records 22% rise

The total sugar production in the country is estimated at
about 2.934 million tons till May 31, 2001, showing a rise of 22 per cent over
the same period last year.

According to Pakistan Sugar Mills Association's statement on
Saturday, imported raw sugar has contributed towards this increase. Of the
total, 2.465 million tons of sugar was produced from sugarcane, 461,798 tons
from raw sugar melting and 6,139 tons from sugar beet slicing. In total, sugar
mills crushed more than 29.405 million tons of sugarcane till the end of April.

Last year, total sugar production stood at 2.414 million tons
during the same period. In Punjab, a total of 1.658 million tons of sugar was
produced of which 1.438 million tons from sugarcane and 219,682 tons from raw
sugar.

OGDCL striving to boost industrial uplift

The state oil company "OGDCL" in line with the
policy framed by the government continues to enhance the production of natural
gas to boost the country's industrial uplift and to cope with the national
demand. According to production figures for the month of May 2001, total
contribution of natural gas by the company was 27,267 MMCFD with daily average
production of 880 MMCFD.

This is one of the highest ever production of gas recorded
since the inception of OGDCL. These production figures indicate an increase of
1,239 MMCFD over the gas produced during the previous month which was 26,028
MMCFD and is an increase of 32,32 MMCFD over the corresponding month during the
year 2000, which was only 24,035 MMCFD. The total value of the gas produced
during May 2001 is Rs3,592 million and has resulted in saving of $69.73m foreign
exchange through import substitution.

Rs130 billion for PSD

An amount of Rs130 billion has been allocated for the public
sector development programme (PSDP) during the year 2001-02 against original
estimates of Rs120 billion for the current fiscal. However, the PSDP-2000-01
subsequently shrank by almost Rs40 billion, with its size being left at about
Rs80 billion.

The notional allocation for the development programme in the
budget has been put at Rs130 billion, including a foreign aid of Rs48.6 billion
and Rs81.4 billion of local currency component.

Augment water resources

Finance Minister Shaukat Aziz in his budget speech on Monday
spelt out a three-year plan worth Rs86 billion aimed at augmenting water
resources in the country.

The plan, which includes projects like construction of Gomalzam and Mirani
dams in Balochistan and irrigation schemes like Thal and Katchi canals will
provide additional storage capacity of 4.5 MAF of water and bring nearly one
million acres under cultivation.